Unlimited PTO – Pros and Cons

Unlimited anything is a difficult concept to grasp,
but when it comes to an employee benefit such as
Paid Time Off (PTO) or Vacation, all sorts of wild
scenarios can be imagined.

The current rage in attracting and recruiting employees,
especially Millennials, is offering Unlimited PTO.

The first thought that jumps to mind on this topic is the
people in an organization who might take advantage of this
benefit. However, there have been a number of research
studies on Unlimited PTO that have determined that the
vast majority of employees actually use less time than if
they received a set number of PTO days.

Despite the research showing that people will probably use
less time, there are other issues to consider.

On the Pros side:
#1 It is a great recruiting tool that candidates use to
determine the flexibility and openness of the company.

#2 It is a great retention tool for current employees.

#3 It can reflect an element of trust that a company has
in its employees and lead to more engaged employees.

#4 It can relieve managers of the burden to track hours
used and balance available.

On the Cons side:
#1 There will be people who will take advantage. As such,
certain rules will need to be put into place.

#2 There may have to be certain Blackout periods that must
be put into place during which PTO may not be used.

#3 If PTO must be approved by a supervisor, then
supervisors must receive training to administer the
approved days off in a non-discriminatory manner.

#4 Some states such as California, that identify PTO as
wages that must be paid upon separation, have not ruled
yet as to whether any amount of Unlimited PTO must be paid
since there is no accrued amount that can be identified.

#5 A decision must be made regarding employees who take
military, FMLA, and ADA leaves of absence as to how many
days of PTO can be used at any point in time.

#6 A company needs to have well established productivity
and performance measures to ensure that the work gets done
if employees have the potential for “endless summer.”

#7 Employees who do any research on Unlimited PTO may
actually discover the research projects proving that less
time is actually used and declare your Unlimited PTO as a
designed trap to get people to work more, not less.

As a company, it sure is a competitive advantage to be on
the leading edge of a progressive benefit such as
Unlimited PTO. However from a practical perspective, how
long do you think you will be able to hold your job if
your boss notices that one week a month, you are not at
work, whether you are completing all of your assignments
or not?

Unlimited PTO may actually tax the limits of a manager’s
tolerance and concept of a work ethic.

The other issue is, “How much PTO does an employee really
need?”

In most organization that provide up to 5 weeks of PTO or
Vacation, the employees almost always get to the end of
the year with about 1 week unused and even the last few
days of the 4th week were even a struggle to get used.

Our opinion is that for 9 out of 10 employees a PTO policy
that provides 5 weeks off is more than adequate to meet
the time off needs of employees.

Additionally if the research is true that people actually
use less time with an Unlimited PTO policy, that is the
wrong message that a company should be sending. We should
be ensuring that all employees use at least 75% of their
PTO/Vacation each year because we want people to get away
and recharge.

Besides, one of the first signs of potential fraud and
improprieties is the employee who never takes time off.

 

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